FINANCIAL MARKETS : Stocks Ease as Traders Await Jobless Report
Continued fears that the Federal Reserve Board will raise short-term interest rates pushed stocks lower for the fourth consecutive session Thursday.
The Dow industrial average fell 11.78 points to 3,775.56. Broader indexes also dropped for the fourth straight day, as losers edged winners by 11 to 10 on the Big Board in moderate trading.
In the bond market, the 30-year Treasury bond yield inched up to a new 28-month high of 7.96% from 7.94% on Wednesday, but shorter-term yields were mostly flat.
Thin trading in stocks and bonds indicated that many investors were sidelined ahead of today’s release of payroll and unemployment data for September. Analysts expect government reports to show that non-farm payrolls increased by about 250,000 last month and that the nation’s unemployment rate stayed steady at 6.1%.
A larger payroll number or big drop in unemployment could send another signal to the Fed that the economy is growing too fast, offering more incentive to the central bank to increase short-term interest rates for the sixth time this year, analysts said.
The Dow has dropped 4.3% since mid-September as bond yields have rocketed, responding to healthy economic reports that suggest the Fed’s hikes in short-term rates so far this year have done little to cool business activity. Worse, inflationary pressures appear to be building in the economy, as demand for goods and services remains robust.
“Everything is pointing to strong retail demand and certainly strong production,” said John Shaughnessy, research director at Advest Inc. “Stocks are going to labor within the context of fears of rising short-term interest rates.”
Among Thursday’s highlights:
* Retail stocks were mixed following the release of generally soft September sales figures. Analysts believe sales were skewed by unusual weather.
Among major retailers, K mart dropped 1/2 to 16 3/4, Sears lost 1/2 to 46 1/2 and TJX tumbled 2 3/8 to 17 7/8. But May Department Stores rose 1/2 to 38 and Penney gained 5/8 to 52 3/8.
* Auto stocks sank anew. They have been among the biggest victims of higher interest rates this year, even though auto sales remain robust. GM plunged 1 5/8 to 44, Chrysler was off 7/8 to 44 1/4 and Ford slipped 3/8 to 27 1/4.
* Some industrial issues were hit by continued profit-taking. Georgia-Pacific dropped 1 3/4 to 73, USX-U.S. Steel lost 1 to 38 3/4 and Union Carbide gave up 3/4 to 31 7/8.
* In the high tech sector, Apple Computer slid 1 5/8 to 36 1/4 after surging on Wednesday on takeover rumors. Elsewhere, Adobe Systems fell 2 to 33 3/4, Lotus sank 1 1/8 to 35 1/8 and Oracle Systems dropped 1 1/4 to 41 5/8.
But Broderbund jumped 1 3/8 to 52 3/8 on a strong earnings report.
Overseas, Tokyo’s Nikkei average slid 96.32 points to 19.655.23. In Frankfurt, the DAX average closed at 1,955.69, down 13.03 points. London’s FTSE 100 index rebounded 28.1 points to 2,984.4.
In Mexico City, the Bolsa index eased 4.48 points to 2,636.91.
